40,000 Explanations For Why The Recording Industry Is Wrong About Business Models

from the start-counting dept

Among Apple's new iPod announcements was the inclusion of a 160Gb iPod Classic. As Steve Jobs noted, that means you could carry around 40,000 songs in your pocket. Forty thousand songs. Leave it to Bob Lefsetz to use this fact to point out how wrong the recording industry has been about music business models. He points out that this highlights how people want music -- in fact, they want lots of music -- and they want it conveniently and reasonably priced. That means at much cheaper prices (are you going to carry around $40,000 worth of music purchases in your pocket?) and without DRM.

He also highlights how the idiotic focus on getting more per song just as everything else about music and technology gets cheaper is hurting the record labels much more than it helps them. He compares the situation to how expensive it was to use mobile phones a dozen years ago. People were scared to use mobile phones because the charges were ridiculously high. You only used it in special circumstances. Today, however, the rates are much, much lower and that's massively grown the market for mobile services. Do you think the mobile operators would prefer to go back to $1/minute charges? Yet, why does the recording industry insist on $1/song charges when the infrastructure can support an entirely different model. Instead, make the music cheap and easily accessible. Take advantage of the infrastructure that allows people to carry around 40,000 songs in their pocket. Sell iPods that are pre-loaded with all kinds of music and watch them fly off the shelves. The record labels (and their supporters) will claim that it doesn't make sense to sell music for less when people are clearly willing to pay $1/song, but that's misunderstanding the market potential. People were willing to pay $1/minute for mobile phone calls too. And they were willing to pay $150/month for broadband access. But as all of those things got much, much cheaper it opened the markets up much wider, provided all sorts of new applications and services that made them more and more valuable -- and helped make the companies much richer by providing better services at cheaper prices. Why can't the recording industry understand that?

Filed Under: business models, ipods, lefsetz, riaa, storage, trends


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  1. identicon
    Anonymous Coward, 10 Sep 2007 @ 9:26am

    Re: Hey Mr "T"

    Lets put Mr Mondo's 250YB claim into perspective.

    Since having even 1YB on a single machine is next to impossible unless he has some new storage device that has yet to be announced I will assume he has several NAS devices. A quick search and I found that Buffalo Tech has a 4TB NAS so lets assume he is using these. To get 250YB of storage space using these 4TB NAS devices he would have to have a total of 274,877,906,944 (that’s 274.8 BILLION devices.) Unfortunately I am unable to find a price for the 4TB version but their 3TB version is selling for $1,600 at Newegg. Using this price it would cost Mr Mondo a grand total of $439,804,651,110,400 or $439.8 TRILLION to gain him his stated 250YB of storage, not to mention the space, cooling, and power requirements needed for these devices.

    The combined net worth of the top 20 richest people in the world according to Forbes adds up to $536.9 Billion. The est. national debt of the US at the time of this posting is $9 trillion. He would have to spend 819 times more than the net worth of the top 20 richest people in the world or 48 times more the est. national debt of the US just to purchase the devices.

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